The UK economy flatlined in the third quarter of 2024, according to latest figures, showing no growth between July and September.
The announcement on Monday is a retraction, as statisticians had previously estimated the economy would show 0.1 per cent growth for the quarter.
The Office for National Statistics (ONS) also revised down its growth reading for the second quarter of 2024, to 0.4 per cent.
In September, the department said GDP had increased by 0.5 per cent, which was a reduction on previous estimates.
It is a blow to chancellor Rachel Reeves and her hopes to turn around the economy after what she described as “15 years of neglect” under consecutive Conservative governments.
Tory opposite number Mel Stride has wasted no time in attacking her record and the budget she delivered last month.
Ms Reeves said in response: “The budget and our plan for change will deliver sustainable long-term growth, putting more money in people’s pockets through increased investment and relentless reform.”
Economists are now wary of the threat of a recession but what does this mean?
What is a recession?
A recession is defined as two successive quarters of decline in GDP – the common measurement of the size of a country’s economy.
In the UK, it is measured in sterling and is a calculation of the value of goods and services produced over a period of time.
But the measurement most people focus on is the percentage change – the growth of the country’s economy over a period of time, typically a quarter or a year. It has been used since the 1940s.
How long does a recession usually last?
The length of a recession can vary depending on several factors and the general economic climate.
The UK entered a recession in 2020 because of Covid lockdowns, and it lasted for six months. This was caused by rising energy prices and the collapse of the housing market.
In 2008, the global financial crash led to five successive quarters of recession and was the longest one since the Second World War.
If a recession carries on for a long time, or is particularly bad, it is known as a depression.
When was the last recession?
The most recent recession was at the end of 2023, when the UK economy retracted by 0.3 per cent in three months.
However, this isn’t as severe as other recession periods in the past. Before this, the economy plunged by 20 per cent between April and June 2020, as businesses closed and people were ordered to stay at home. GDP had fallen by 2.2 per cent between January and March that year.
At the time, the ONS said: “This is the largest quarterly contraction in the UK economy since ONS quarterly records began in 1955, and reflects the ongoing public health restrictions and forms of voluntary social distancing that have been put in place in response to the coronavirus pandemic.”
